Clemens Brothers Construction, No. 200 (December 10, 2003) Docket No. BDPT-2003-09-22-07 UNITED STATES OF AMERICA SMALL BUSINESS ADMINISTRATION OFFICE OF HEARINGS AND APPEALS WASHINGTON, D.C. ) IN THE MATTER OF: ) Docket No. BDPT-2003-09-22-07 ) Clemens Brothers Construction ) Decided: December 10, 2003 ) Petitioner ) ) ORDER GRANTING MOTION FOR SUMMARY DECISION Facts and Arguments On November 24, 2003, Respondent Small Business Administration (SBA) moved for dismissal or for summary decision. Motion to Dismiss or for Summary Decision (SBA Motion); Memorandum in Support of SBA Motion (SBA Memorandum) (Nov. 24, 2003). In support of the motion, the SBA offered copies of Steven A. Clemens's Statement of Personal History (SBA Form 912), dated November 11, 2000; and Report-Indeterminate Sentence or Other Sentence Choice (California Form CR 291), dated November 3, 1992. SBA Motion Ex. 2, 4. On the SBA Form 912, Mr. Clemens answered in the negative the following questions: "7. Have you ever been charged with or arrested for any criminal offense other than a minor motor vehicle violation?" and "8. Have you ever been convicted . . . or placed on any form of probation, including adjudication withheld pending probation, for any criminal offense other than a minor vehicle violation?" SBA Motion Ex. 2. The California Form CR 291 states that, on October 16, 1992, Mr. Clemens was, pursuant to guilty pleas, convicted of resisting an executive officer and reckless driving-felony criminal offenses not involving a minor vehicle violation-and placed on probation. SBA Motion Ex. 4. The SBA terminated Petitioner Clemens Brothers Construction (Petitioner) for submitting false information in its application for the 8(a) Program, in violation of 13 C.F.R. Section 124.303(a)(1). Amended Appeal Petition (Amend. App. Pet.) Ex. 1 (SBA Determination), at 1. Specifically, the SBA alleged, Mr. Clemens, Petitioner's president, had provided negative responses on SBA Form 912, notwithstanding his convictions. Id. The SBA stated that, in Petitioner's March 31, 2003, response to the SBA's March 17, 2003, Letter of Intent to Terminate, Petitioner had not disputed the record of arrests, charges, and convictions, and had indicated that Mr. Clemens was serving a sentence; but claimed that he had assumed that the questions related to business activities only and, because his conviction did not relate to business activities, he had not intentionally provided incorrect responses to them. Id. The SBA found that Petitioner's contention did not appear reasonable, given the wording of the questions, and that Petitioner thus had not overcome the grounds for termination. Id. at 1-2. The SBA contends its motion should be granted because either (1) the petition does not assert facts that, if proven true, would warrant reversal or modification of the SBA Determination; or (2) there is no genuine issue as to any material fact, and the SBA is entitled to a decision in its favor as a matter of law. SBA Memorandum at 1 (citing 13 C.F.R. Sections 134.405(a)(1), 134.212, 134.408). The SBA reasons: (1) Mr. Clemens's misunderstanding was unreasonable because nothing in the form could lead a reasonable person to believe its scope was limited to criminal activity involving business, id. at 3; and (2) the SBA's decision was therefore not arbitrary, capricious, or contrary to law, id. at 4. On December 3, 2003, Petitioner opposed the motion. Opposition to SBA Motion (Petitioner Opposition) (Dec. 8, 2003). Petitioner claimed on appeal that (1) because Mr. Clemens was completing SBA paperwork, he assumed all questions referred to business activities and the questions asked if he had personally committed business-related crimes such as fraud or embezzlement, App. Pet. at 2; (2) the questions, as Mr. Clemens reads them "with new understanding[,] are vague, ambiguous[, and] open to interpretation," App. Pet. at 3; (3) on May 6, 2002, Petitioner's general manager advised its SBA business opportunity specialist (BOS), about Mr. Clemens's pending incarceration, id. at 2, Ex. 1; and (4) the BOS took no action and continued to correspond with Petitioner as an 8(a) participant for more than a year until, on March 5, 2003, Mr. Clemens wrote to another SBA official to complain about the BOS's failure to help Petitioner become competitive and requested that another SBA employee be assigned as Petitioner's BOS, id. at 2-3, Ex. 2-4. Petitioner argues the motion should be denied because (1) contrary to the SBA's assertion in its motion, Mr. Clemens has never been to prison and has never admitted to making false statements; (2) Mr. Clemens is a good role model in the community who has helped the poor go to college, given work to the homeless, and fed the needy; and (3) the BOS terminated [sic] Petitioner from the 8(a) Program only after Mr. Clemens asked that the SBA replace him as Petitioner's BOS. Petitioner Opposition at 2. Discussion To prevail on a motion for summary decision, the SBA must establish both the absence of a genuine issue of any material fact and the SBA's entitlement to a decision in its favor as a matter of law. 13 C.F.R. Sections 134.212(a), 134.408(a). I find that the SBA has met these requirements and is entitled to a decision in its favor as a matter of law. SBA regulations permit the SBA to terminate a participant from the 8(a) Program for good cause. 13 C.F.R. Section 124.303(a). Examples of good cause include submitting false information in the concern's 8(a) BD application, regardless of whether correct information would have caused the SBA to deny the concern admission to the program and regardless of whether correct information was given to SBA in accompanying documents or by other means. 13 C.F.R. Section 124.303(a)(1). There is no requirement that the applicant willfully submitted false information. Further, the SBA makes clear to applicants on the SBA Form 912 that (1) "[i]t is against SBA's policy to provide assistance to persons not of good character"; (2) "consideration is given to a person's behavior, integrity, candor, and disposition toward criminal actions"; and (3) therefore, "it is important that [questions 6, 7, and 8] be answered truthfully and completely," because "[a]n arrest o[r] conviction record will not necessarily disqualify you; however, an untruthful answer will cause your applicatio[n] to be denied." Petitioner does not deny that Mr. Clemens knew that he had been charged with, arrested for, convicted of, or placed on probation in connection with a criminal offense other than a minor vehicle violation. See SBA Motion Ex. 2. Further, Petitioner does not dispute that the documents are correct. Petitioner claims that Mr. Clemens assumed all of the questions referred to business activities; thus, he made an honest mistake concerning the meaning of the questions and did not willfully submit a false statement. This is of no consequence because any such mistake is unreasonable and does not excuse the falsehood. The grounds for termination in 13 C.F.R. Section 124.303(a)(1) require only that the responses be false. There is no requirement that Mr. Clemens must have willfully made a false statement. Contrary to Mr. Clemens's claims, the questions cannot be reasonably considered vague, ambiguous, or open to reasonable interpretation, particularly in light of the accompanying instructions, which caution applicants that that it is against SBA's policy to provide assistance to persons of bad character; that SBA considers a person's behavior, integrity, candor, and disposition toward criminal actions; and that it is important that the questions be answered truthfully and completely, because, although an arrest or conviction record will not necessarily disqualify the applicant, an untruthful answer will cause the application to be denied. Thus, Petitioner's assertion that Mr. Clemens's responses were the result of an honest mistake is unreasonable and does not raise a "defense" to the grounds for termination. Accordingly, no genuine issue of material fact exists. The SBA reasonably found that Petitioner had not overcome the ground for termination. Thus, the SBA Determination was not arbitrary, capricious, or contrary to law. Therefore, the SBA is entitled to judgment in its favor.[1] Conclusion Accordingly, the Motion for Summary Decision is GRANTED,[2] and the appeal is DISMISSED. Subject to 13 C.F.R. Section 134.409(c), this is the final decision of the Small Business Administration. See 15 U.S.C. Section 637(a)(9)(D); 13 C.F.R. Section 134.409(a). RICHARD S. ARKOW Administrative Law Judge _______________________________ 1 Petitioner's remaining arguments are irrelevant to the motion and merit no discussion. 2 Because of this disposition, I need not decide whether to decline jurisdiction. Posted: December, 2003